I grew up in Beijing, China, where I witnessed how political, social and economic trends—what I call “tides of the age”—impacted ordinary people’s lives. Before joining Forbes Asia in New York as a reporter and online producer, I interned here for two summers covering Chinese business news, and was a news assistant at The New York Times Beijing bureau for a summer. I'm interested in how politics impacts business in China, and U.S.-China investments. Follow me on Facebook and Twitter @Hengshao90. Email me at hshao[at]forbes.com.

Updated: Critique Of Starbucks By China's State Broadcaster Backfires

Starbucks China posted this picture on its official Weibo account on Monday, Oct 21, attracting a flurry of comments and retweets.

Update: StarbucksStarbucks China deleted the attention-grabbing photo on its official Weibo account less than 48 hours after it was posted. Noting that the animal figure was in fact a giraffe, not an alpaca, a statement from the company read: “We had absolutely no intention to use this blog post as a response to the recent media attention for Starbucks.”

The story has been updated since it was first published. See below -

A picture of a pen with an alpaca-like ornament at its top, posted by Starbucks China on its official Weibo account on Monday, attracted a flurry of some 3,000 comments and 40,000 retweets. As pronunciation of the Chinese nickname for alpacas, “cao ni ma (directly translates as Grass Mud Horse),” suggests vulgarity, most commentators interpreted the picture to be Starbucks’ veiled strike-back at a recent TV program investigating its high price point by China’s state broadcaster.

The 20-minute show, aired on the news channel of China Central Television on Monday, found Starbucks’ coffee to be higher priced in China than in Chicago, London and Mumbai despite lower production and operational costs. Citing testimonies from an industry expert, a former franchisee and customers, the program suggested that the price differential constituted a form of discrimination against Chinese consumers. Customers “find the price to be ridiculously expensive.” the narrator said, “An ordinary cup of coffee in western countries has become the luxury of coffee in China.”

John Culver, president of Starbucks China and Asia Pacific, refuted the notion of higher margins. Higher prices in China, he said, reflected costs of training employees, locating ingredients from safe sources, and maintaining larger store space as Chinese customers tend to linger longer than their American counterparts, Reuters reported.

In becoming CCTV’s prey, Starbucks is following the footsteps of other foreign conglomerates with substantial presence in China. In the past year, the state broadcaster has picked on the quality of AppleApple’s customer services in China, Samsung’s repair policies, cleanness of KFC’s ice cubes, and prices of Haagen Dazs ice-cream moon-cakes.

Yet unlike in those previous incidents, where public opinions of the targeted parties became more negative or polarized, this time commentaries on Weibo predominantly sided against CCTV. While some lamented its lack of appreciation for market economy forces, more chastised the broadcaster for zooming in on a topic that so obviously pales before other domestic grievances. As a well-known Weibo commentator nicknamed ‘Notebook’ sharply remarked:“[The Chinese] are buying the world’s most expensive houses, driving the most expensive cars fueled by gases with the fastest rising price, eating the least safe food, and ‘enjoying’ a system of healthcare that bankrupts most families with one stroke of serious illness…seeing none of this, you are telling me that the coffee I drink less than five times a year is the most expensive coffee in the world. How interesting!”

Even before the Starbucks incident, the state broadcaster was already “losing public trust,” writes Christopher Marquis, an associate professor at Harvard Business School who tracks Chinese public opinions online, in a recent article on Chinese protectionism. In the Apple case for instance, it was believed that CCTV instructed several verified users on Weibo to criticize the company. Apple’s share price climbed 2% the day after the CCTV program aired, Marquis points out.

Stock price of Starbucks, which derives 6% of its revenue from the Asia Pacific region, dropped a slight 0.2% when the market opened on Monday but rebounded 0.4% by the day’s closing.

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